Abstract: In hub communication networks a certain subset of focal nodes (i.e. hubs) is fully interconnected while other nodes are connected to those hubs. The communication between nodes is done via hubs. The advantage of hub networks is the usage of relatively small number of links and exploitation of economies of scale by concentrating flows. The cost of services delivered through a hub network is distributed among its users who may be individuals or organizations with possibly conflicting interests. The cooperation of these users is essential for the exploitation of economies of scale. Consequently, arises a need to find a fair distribution of the cost of providing the service among users of hub network. In order to describe this cost allocation problem we formulate several associated cooperative games, to be refereed to as the hub games, in which special attention is paid to users contribution to economies of scale. Then we investigate the structure and computation of the core and the nucleolus of hub games.
Keywords: Hub location; Cost allocation, Cooperative games, Linear programming; Integer programming.
Darko Skorin-Kapov got his undergraduate and masters degree in mathematics and Information Systems, respectively from the University of Zagreb, Croatia. He received his Ph.D. in Management Science from the University of British Columbia, Vancouver, Canada In 1989 he has started his affiliation as an Assistant Professor with the Harriman School for Management and Policy at the State University of New York at Stony Brook. He is currently visiting the Faculty of Economics at University of Zagreb as a Fulbright Scholar. His research is predominantly in the area of network optimization and cost allocation. He has published in Annals of Operations Research, Discrete Applied Mathematics, European Journal of Operational Research, Journal of Computer and Information Technology, Location Science, Management Science, Operations Research Letters, SIAM Journal of Discrete Mathematics, Telecommuni-cation Systems.